Global Financial Leaders Recommend Cutting Fossil Fuel Subsidies

Global Financial Leaders Recommend Cutting Fossil Fuel Subsidies

Global financial institutions including the International Monetary Fund and the World Bank have released a new set of recommendations for G20 countries to meet their goal of providing $100 billion a year in aid for developing nations to combat climate change. In addition to calls for charges on carbon emissions and higher prices for carbon-intensive fuels, the financial experts said the first source of funding should come from redirecting fossil fuel subsidies.

In a move that will surely leave the dirty energy industry in a fit of rage, global economists said that fossil fuel subsidies should be cut and redirected towards helping developing nations fight climate change. The total amount spent on industry subsidies for G20 countries is currently $60 billion a year, more than half of what the countries have pledged to spend per year on climate initiatives and renewable energy projects.

The draft paper says the starting point should be a review of fossil fuel subsidies, amounting to $40 billion to $60 billion a year. But many of those subsidies are handed out in poor countries, where people living on the edge of subsistence need help, for example, to buy cooking gas. Still, subsidy reforms in industrialized countries and emerging economies could contribute $10 billion a year to a climate fund, it said.

In the United States, the battle to preserve the dirty energy industry’s subsidies is one that the industry has handily won, time after time. When the issue came up for debate earlier this year, the industry and their defenders at the American Petroleum Institute and the Heritage Foundation led the charge to preserve billion dollar subsidies for dirty energy by claiming that the industry would be forced to cut countless jobs and raise energy costs if the subsidies were taken away.

To make matters worse for the oil industry, former Shell CEO John Hofmeister informed America earlier this year that the industry would remain perfectly healthy with no changes in their business practices if their subsidies were to disappear. Hofmeister went as far as to tell us that the subsidies weren’t even necessary for the cash-flush industry.

Studies have shown that redirecting the subsidies given to the energy industry into renewable fuels would have a profound effect. The following chart from Solar Power Rocks tells the story:

Still, the dirty energy industry is not going to take the recommendation to cut their subsidies lightly. The G20 will convene in November of this year to discuss the recommendations, and the dirty energy industry will be watching the events at that convention like a hawk.

Previous Comments

Fantastic news. It would be good if they either cut fossil fuel subsidies completely, or halve them & give the other half to renewables. Renewables have a certain advantage in these poorer nations. For starters, renewables can be pretty much inserted right into location, no matter how remote.

Fossil fuels require vast infrastructure &/or transport.

Secondly, if it’s about powering poorer nations for minimal cost, which 1st world countries would have to provide, then renewables would be the way to go. A short pay off period with years of free energy after that, where 1st world countries don’t have to dip into taxpayers funds to continue supply. You just can’t do that with fossil fuels. There is never a free or cheap energy period. It’s pay pay pay forever & the rate just goes up constantly.

It’s ironic, because a lot of the fossil fuel fans & industry insiders scream about tax payers funds & free markets. Yet they feel it’s ok to pilfer the public purse when it benefits only the fossil fuel industry or adopt free market ideals when they are the only ones in the market.

What, one in a hundred? No fossil fuel companies have ever gone bankrupt?

http://mindprod.com/politics/bushresume.html

Excerpt: “I bought an oil company, but couldn’t find any oil in Texas. The company went bankrupt shortly after I sold all my stock. The bin Laden family gave me money to try again, and I bankrupted that company too.”

“In my world oil states are loaded because people like to buy oil.”

People don’t like to buy oil. They have to buy oil. Currently there is no choice. We are trying to change that, much to your resistance.

“Actually, oil and gas companies go bankrupt all the time. Regardless of what you think of George Bush, it is a very capital intensive, risky and speculative business.”

So it’s not really fair play to pretend that bankruptcy is the default economic trajectory for any solar company as Rick James implied, is it?

After all, there are literally thousands of other companies that are doing just fine & doing so without subsidies. Lets look at the green economy in the U.S . Picking the worst state possible that you would think of for a green tech company (Texas) ,because of fossil fuel entrenchment & ideological opposition, we see a reasonably vibrant green tech sector:

http://apps.edf.org/page.cfm?tagID=34065&state=TX

Contrasted with New York : http://apps.edf.org/page.cfm?tagID=34065&state=NY

It seems the transition in Texas is already under way :). Yet if we were to believe Rick, the only thing that can happen with a solar company, is for it to go bankrupt, as he flatly states, this is what happens in his world.

“On the up-side though, if an oil company goes bankrupt in North America, they don’t take over $1 billion in taxpayer dollars down with them.”

What rubbish. Considering the pool of subsidies is vastly more for fossil fuel companies, the overall tax payer exposure is far worse. You are zeroing in on a fledging industry & only one in hundreds of others. The fossil fuel industry has been getting tax payer subsidies for the best part of 100 years. The solar industry, a couple of years.

“The same can’t be said about a certain solar panel fantasy industry.”

Going by the links I have provided with actual business names, addresses & phone numbers of clean tech businesses in the USA, you are wrong. Why would you seek to falsify facts?

“I don’t chose to invest in your cockamamie business, so you keep your fingers out of my wallet,”

Yet, you probably didn’t whinge when Bush spent 100’s of billions of tax payers money on wars where there was no evidence, or tax payers funds going to a multitude of religious organisations did you?

“So it’s not really fair play to pretend that bankruptcy is the default economic trajectory for any solar company as Rick James implied, is it?”

Actually it is. But then, I merely base that on the fact that they keep going bankrupt.

“After all, there are literally thousands of other companies that are doing just fine & doing so without subsidies.”

And you know this how, exactly? Are you claiming you have reviewed the financial statements of “literally thousands of companies” that manufacture solar panels, and you have verified exactly who, and who is not, in receipt of government subsidies, either directly or indirectly? Pardon me if I call bullshit on that.

And just because a company exists on some map that you found somewhere, generated by a political lobby group such as the Environmental Defense Fund (really?), doesn’t necessarily imply that they are a) profitable, or b) not receiving government subsidies.

Weak …

“What rubbish. Considering the pool of subsidies is vastly more for fossil fuel companies, the overall tax payer exposure is far worse.”

What “subsidies”? Please give us a verifiable example.

“The fossil fuel industry has been getting tax payer subsidies for the best part of 100 years.”

Again, what “subsidies” would those be?

“Going by the links I have provided with actual business names, addresses & phone numbers of clean tech businesses in the USA, you are wrong. Why would you seek to falsify facts?”

Huh? You posted a link to a random collection of something or other. I didn’t see any solar panel manufacturers in there, but then I don’t have the time to sift through your barrage of nonsense.

“Yet, you probably didn’t whinge when Bush spent 100’s of billions of tax payers money on wars where there was no evidence, or tax payers funds going to a multitude of religious organisations did you?”

“Actually it is. But then, I merely base that on the fact that they keep going bankrupt.”

Interesting….so I gather you can provide evidence of this? Because it’s the first I have heard out of hundreds & i have also provided you with links proving you wrong. Please show via link that all solar companies go bankrupt. What about giants like Sunpower & First Solar?

“And you know this how, exactly?”

I was talking about cleantech companies in general, not exclusively solar.

“And just because a company exists on some map that you found somewhere”

Contrast this with your evidence, which is entirely anecdotal or opinion. You provide no links at all! You do realise you have provide nothing to back any of your opinions….don’t you?

“What “subsidies”? Please give us a verifiable example.”

Now your arguing that fossil fuel companies get no subsidies what so ever?

“Huh? You posted a link to a random collection of something or other. I didn’t see any solar panel manufacturers in there,”

You didn’t bother to look did you? I mean, you could just do a keyword search for solar….just a hint. But hey, since your not a get off your arse & do some work kind of guy. I will make it even easier for you. Here a listing from the American Solar Energy Society (ASES).

“but then I don’t have the time to sift through your barrage of nonsense.”

Yes, no time for facts, but plenty of time for opinion. It’s like being inserted into the movie “Idiocracy”.

“And once again – huh?! What on Earth are you babbling on about?”

I am illustrating that you are getting all up in arms about solar subsidies worth F.A in the grand scheme of things , when you probably cheered & waved a flag & supported America going to war on terror with no evidence & didn’t bat an eyelid at them spending hundreds of billions. Irony & contradiction.

Oil industry tax deductions cover costs incurred in exploration, drilling, production, transportation and refining. They aren’t subsidies or special tax breaks. They are essentially the same deductions claimed by all manufacturers, in conducting their business under our complex tax code. They ensure that businesses recover their costs and get taxed only on net income, in the process of making essential products.

There are not very many “subsidies” for oil companies, not in the same way government hands out cash to solar and wind anyway. Real subsidies take money away from productive sectors and redirect them to unproductive ones, like we currently do by taking tax money from prodcutive oil companies and direct them to unproductive companies in the solar field like Solyndra.

Most companies in the oil sector are not “big oil” but rather small and medium independents who need the same deductions as other sectors to carry on business.

The other factor to consider is that we can survive without solar companies, Imperial oil goes belly up and North America has a serious strategic issues that reach far beyond the bottom line.

The system we have right now is very equitable except for the large subsidies given to ethanol and other green techs, they should make it on their own.

Ralph, are your bolded comments derived from a link? If so please get into the habit of including the link, so others can ascertain their veracity.

“They are essentially the same deductions claimed by all manufacturers,”

All manufacturers have rail & ports built for them? And have taxpayers spend billions in cleaning up their mess?

“There are not very many “subsidies” for oil companies, not in the same way government hands out cash to solar and wind anyway.”

Ralph, Farron Cousins has provided ample links which says you are wrong. This site also backs the $70B a year ball park figure.

http://priceofoil.org/fossil-fuel-subsidies/

Tax payers money is also used to build infrastructure in 3rd world countries for the benfit of the fossil fuel companies. So tax payers money is used basically to provide fossil fuel companies with profit, they wouldn’t have had if they were to go it alone. They can tap into international funds which actually draw on tax payer funds to build their projects.

Excerpt: “via institutions like the World Bank, the U.S. Export-Import Bank, or the Overseas Private Investment Corporation—all of which are supported by U.S. tax dollars, all of which gave billions last year to the fossil fuel industry, and all of which could be important sources of public funds for clean energy.

These institutions actually use our tax dollars to build infrastructure for fossil fuel extraction and use in the developing world. So, if we don’t end this practice first, we’re essentially saying to the rest of the world that we’ll use our public funds to support Exxon, Chevron, and Shell to build carbon intensive infrastructure in the developing world, but we’d like the developing world to remove the subsidies that make use of that infrastructure affordable to its population.”

All manufacturers get this Ralph?

“The other factor to consider is that we can survive without solar companies, Imperial oil goes belly up and North America has a serious strategic issues that reach far beyond the bottom line.”

No, it wont. The void will simply be filled by others.

“The system we have right now is very equitable except for the large subsidies given to ethanol and other green techs, they should make it on their own.”

The system where fossil fuel companies get $70B in subsisies & greentech $20B is equitable? And greentech should be made to make it on their own? I can see your a real free market idealist…….not. You support monopolies.

Not only, are the subsidies an issue, but the bribe money that the fossil fuel companies pay politicians ( mainly Republicans) to push their agenda. Conservatives in the USA, Canada & Australia are no longer pro businesss it seems. They are pro monopoly & are hooked on fossil fuel bribe money.

http://www.dirtyenergymoney.com/

With Republican John Cornyn receiving nearly $2million in bribe money:

http://www.dirtyenergymoney.com/view.php?type=search&can=N00024852

Not a bad bonus on top of his politicians salary.

Or the companies that pretty much buy congress.

http://www.dirtyenergymoney.com/overview.php?type=company

Are your really having politicians represent your views & needs, or are you simply parroting the needs of fossil fuel companies? Because they pay off senators & you back the party that those senators belong to, so you ideologically just tow the line.

Democracy is utterly dependent upon an electorate that is accurately informed. In promoting climate change denial (and often denying their responsibility for doing so) industry has done more than endanger the environment. It has undermined democracy.

There is a vast difference between putting forth a point of view, honestly held, and intentionally sowing the seeds of confusion. Free speech does not include the right to deceive. Deception is not a point of view. And the right to disagree does not include a right to intentionally subvert the public awareness.

Keep In Touch

Perhaps you heard the good news - the world's largest public relations firm, Edelman, just spun off an advertising subsidiary so that it could show a commitment to not aiding the denial of climate change science....